Polpharma's grand plans
Analysts, however, are skeptical that winning control of Nizh Pharm will further Polpharma's ambitions. They also doubt Polpharma's ability to become a regional power unless it manages to produce a best selling patent, attract a strategic investor or generate significantly more capital.
Only last October, Polpharma's owner, Jerzy Starak, one of Poland's richest men, was talking about the acquisition of a German company sitting around number 15 on the market. These plans have now been abandoned, according to Glinka, who says this is because the costs of such an investment in Germany would be too high in relation to the potential profits. Now Polpharma is bidding for Nizh Pharma, a Russian company which, according to Jacek Glinka, is somewhere between number four and seven on the local market, as part of a grand plan to become a regional giant.
According to Gergely Várkonyi, an emerging markets analyst at ING Financial Markets, there's little attraction for any foreigner to make acquisitions on the Russian market, which has nothing much to offer either in terms of quality drugs or manufacturing capacities.
"The only opportunities for foreigners on the Russian market are not through acquisitions, but through organic growth," he says.
Though the Russian market is very attractive in terms of growth potential, he went on to add, "The lack of any real central reimbursement means that high retail prices are a barrier to sales for EU quality drugs."
According to Oles Kopets, an analyst at Foyil Securities New Europe, Polpharma's chances of becoming a Central European power through acquisitons are likely to be trumped by its bigger rival, the Croatian firm Pliva. "Pliva is very much in a buying mood," he says, adding, "It's hard to compare Polpharma with Pliva, considering that Pliva is about five times bigger."
The fact that the patent for its champion innovation is due to run out next year, Kopets says, means Pliva is currently on a general Central European shopping spree, with the aim of shoring up source income to offset falls when the patent ends. Any attractive acquisitions in the region, in his view, are likely to be snapped up by the firm, which had an income of over a billion dollars compared with Polphamra's zł.815 million ($203 million) in sales last year.
The only two companies that might qualify as Central European powers, analysts went on to say, are Pliva itself and Slovenian-based Lek, neither of which are comparable with Polpharma. The current success of Pliva, which is owned by institutional investors, was built largely on the back of one innovative drug, which, developed in the early 90s, generated the income that has since fuelled the Croatian firm's Central European expansion. Even so, according to one analyst, it's largely the bigger Western markets, such as the USA and Germany, that drive Pliva's income. Lek, which since 1995 has been selling finished drugs on the U.S. market, has become a local force to be reckoned with since its cooperation with Sanofi-Synthelabo helped generate the income to fund Romanian and Polish takeovers. In 2002, it found itself a strategic investor in the Swiss-based pharmaceutical group Novartis.
On its current income, Polpharma is unlikely to get very far, say analysts. To increase its weight it would have to break into more lucrative markets, develop a bestselling drug, or significantly increase its resources. As regards the first, Polpharma currently has 25 drugs in the pipeline. However, Glinka was unforthcoming with details. One is known to be a generic copy of Pfizer's centrally registered Viagra, but doubts about the legality of its registration after 2008, as well as the fact that two other local firms also claim to have developed Viagra copies, mean its chances of being a best seller are not great. As regards the other 24 drugs, however, we can only guess.
Polpharma has certainly shown signs of looking for a strategic investor. Meanwhile, according to Glinka, the company has no immediate plans to raise capital on the stock exchange, although he didn't rule out the possibility of a debut within the not too distant future.
The tragi-comic tale of Kutno
The battle for control of Polfa Kutno seems to have ended, for the moment, in an atmosphere of bitterness and uncertainty, with the big question being: what is Recordati going to do now?
As a result of its share call, through which it hoped to gain 49.99 percent, the Italian pharma-ceutical concern is now the proud owner of 307,839 shares at zł.310 a piece in Polfa Kutno, despite a scheduled rival offer of zł.340 from U.S. pharmaceutical concern IVAX. Much to the amazement of both analysts and those share-holders that held on to their stakes, 16.4 percent of shareholders sold up to the Italians, with the result that Recordati is now Polfa Kutno's biggest shareholder. There appears to be little doubt, however, that IVAX, currently in the process of collecting the necessary papers for a call, will soon move in to acquire at least the minimum 75 percent of the 75-100 percent stake it desires, the only possible uncertainty being whether or not the U.S. firm, which originally wanted to pay with IVAX shares, will offer enough in cash to suit the interests of Polfa Kutno's shareholders. The question, since no one suspects Recordati of any ambition to be a minority shareholder in an IVAX subsidy, is what the Italians will do now?
Polfa Kutno's management has threatened to walk out if it comes to a Recordati takeover, which lends fuel to some analysts' suggestions that Recordati might just try to stick around and make enough trouble for IVAX to go away. The fact that, as IVAX appears well aware, the Polfa Kutno management is widely credited for the firm's success to date seems to lend some feasibility to this view. The other option would be for Recordati to simply sell up to IVAX, and take home the profits, which, somewhat comically, would make the Italian firm the markets' most successful speculator on its own failure.
Only last September, ironically, IVAX, which is now paying zł.340 a share, could have had Polfa Kutno, with no competition, for just zł.180 a piece. Back then, it's owners, Enterprise Investors, a Central European private equity fund, couldn't find a strategic investor for love nor money, whereas now they're all but fighting each other. A fact that to Ryszard Wojtkowski, a partner at Enterpirse Investors, is testimony to the strangely belated magic of two words: 'European Union.'
Only last October, Polpharma's owner, Jerzy Starak, one of Poland's richest men, was talking about the acquisition of a German company sitting around number 15 on the market. These plans have now been abandoned, according to Glinka, who says this is because the costs of such an investment in Germany would be too high in relation to the potential profits. Now Polpharma is bidding for Nizh Pharma, a Russian company which, according to Jacek Glinka, is somewhere between number four and seven on the local market, as part of a grand plan to become a regional giant.
According to Gergely Várkonyi, an emerging markets analyst at ING Financial Markets, there's little attraction for any foreigner to make acquisitions on the Russian market, which has nothing much to offer either in terms of quality drugs or manufacturing capacities.
"The only opportunities for foreigners on the Russian market are not through acquisitions, but through organic growth," he says.
Though the Russian market is very attractive in terms of growth potential, he went on to add, "The lack of any real central reimbursement means that high retail prices are a barrier to sales for EU quality drugs."
According to Oles Kopets, an analyst at Foyil Securities New Europe, Polpharma's chances of becoming a Central European power through acquisitons are likely to be trumped by its bigger rival, the Croatian firm Pliva. "Pliva is very much in a buying mood," he says, adding, "It's hard to compare Polpharma with Pliva, considering that Pliva is about five times bigger."
The fact that the patent for its champion innovation is due to run out next year, Kopets says, means Pliva is currently on a general Central European shopping spree, with the aim of shoring up source income to offset falls when the patent ends. Any attractive acquisitions in the region, in his view, are likely to be snapped up by the firm, which had an income of over a billion dollars compared with Polphamra's zł.815 million ($203 million) in sales last year.
The only two companies that might qualify as Central European powers, analysts went on to say, are Pliva itself and Slovenian-based Lek, neither of which are comparable with Polpharma. The current success of Pliva, which is owned by institutional investors, was built largely on the back of one innovative drug, which, developed in the early 90s, generated the income that has since fuelled the Croatian firm's Central European expansion. Even so, according to one analyst, it's largely the bigger Western markets, such as the USA and Germany, that drive Pliva's income. Lek, which since 1995 has been selling finished drugs on the U.S. market, has become a local force to be reckoned with since its cooperation with Sanofi-Synthelabo helped generate the income to fund Romanian and Polish takeovers. In 2002, it found itself a strategic investor in the Swiss-based pharmaceutical group Novartis.
On its current income, Polpharma is unlikely to get very far, say analysts. To increase its weight it would have to break into more lucrative markets, develop a bestselling drug, or significantly increase its resources. As regards the first, Polpharma currently has 25 drugs in the pipeline. However, Glinka was unforthcoming with details. One is known to be a generic copy of Pfizer's centrally registered Viagra, but doubts about the legality of its registration after 2008, as well as the fact that two other local firms also claim to have developed Viagra copies, mean its chances of being a best seller are not great. As regards the other 24 drugs, however, we can only guess.
Polpharma has certainly shown signs of looking for a strategic investor. Meanwhile, according to Glinka, the company has no immediate plans to raise capital on the stock exchange, although he didn't rule out the possibility of a debut within the not too distant future.
The tragi-comic tale of Kutno
The battle for control of Polfa Kutno seems to have ended, for the moment, in an atmosphere of bitterness and uncertainty, with the big question being: what is Recordati going to do now?
As a result of its share call, through which it hoped to gain 49.99 percent, the Italian pharma-ceutical concern is now the proud owner of 307,839 shares at zł.310 a piece in Polfa Kutno, despite a scheduled rival offer of zł.340 from U.S. pharmaceutical concern IVAX. Much to the amazement of both analysts and those share-holders that held on to their stakes, 16.4 percent of shareholders sold up to the Italians, with the result that Recordati is now Polfa Kutno's biggest shareholder. There appears to be little doubt, however, that IVAX, currently in the process of collecting the necessary papers for a call, will soon move in to acquire at least the minimum 75 percent of the 75-100 percent stake it desires, the only possible uncertainty being whether or not the U.S. firm, which originally wanted to pay with IVAX shares, will offer enough in cash to suit the interests of Polfa Kutno's shareholders. The question, since no one suspects Recordati of any ambition to be a minority shareholder in an IVAX subsidy, is what the Italians will do now?
Polfa Kutno's management has threatened to walk out if it comes to a Recordati takeover, which lends fuel to some analysts' suggestions that Recordati might just try to stick around and make enough trouble for IVAX to go away. The fact that, as IVAX appears well aware, the Polfa Kutno management is widely credited for the firm's success to date seems to lend some feasibility to this view. The other option would be for Recordati to simply sell up to IVAX, and take home the profits, which, somewhat comically, would make the Italian firm the markets' most successful speculator on its own failure.
Only last September, ironically, IVAX, which is now paying zł.340 a share, could have had Polfa Kutno, with no competition, for just zł.180 a piece. Back then, it's owners, Enterprise Investors, a Central European private equity fund, couldn't find a strategic investor for love nor money, whereas now they're all but fighting each other. A fact that to Ryszard Wojtkowski, a partner at Enterpirse Investors, is testimony to the strangely belated magic of two words: 'European Union.'
